© The Financial Times Ltd 2015 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
February 6, 2013 6:50 pm
For a body that has just undergone the biggest transformation in its 17-year history, the Arctic Council is hopelessly self-effacing.
Tucked away at the end of a long, dim corridor inside a building full of polar researchers in Norway’s northern city of Tromsø, it has just a handful of staff in a few temporary offices and an unpretentious meeting room.
It hardly seems much for the club of eight countries with territory inside the Arctic Circle: the US, Russia, Canada, Norway, Sweden, Iceland, Finland and Denmark, which represents Greenland.
Like so much else in the Arctic, however, this is about to change. At a little-noticed signing ceremony three weeks ago, the council finally set up a permanent secretariat in Tromsø with its first full-time director, a senior Icelandic civil servant. Soon, it will have more staff, a grander office and a bigger presence.
It was, says Espen Barth Eide, Norway’s foreign minister, “a very important day in the history of the Arctic”.
Yet this is only the latest sign of a surge in diplomatic, commercial and scientific activity in one of the world’s last unspoilt wildernesses. Much of this Arctic awakening is being driven by the belief that rapidly melting Arctic ice will unleash access to more than a fifth of the world’s undiscovered oil and gas deposits, plus a lot of fish and tourist attractions.
So far, it has unfolded peacefully. But two distinct schools of thought are emerging about whether it will stay this way or eventually erupt into what Scott Borgerson, a US maritime policy specialist, has described as “an armed mad dash” for resource spoils in a region that never expected to need the rules to prevent such chaos.
“Either outcome is possible,” says Canadian academic, Michael Byers, author of Who Owns the Arctic? Right now, he says, “there is a concerted effort on the part of all the Arctic countries to steer future development towards co-operation and away from conflict”.
But doubts persist. “It sounds like Europe in 1935,” says Rob Huebert of the University of Calgary’s Centre for Military and Strategic Studies, the co-author of a study showing that some Arctic countries, including Russia, have already started rebuilding their Arctic military capabilities while others have plans to follow.
Such is the uncertain backdrop to a region producing more surprises each year, not least in the shipping trade.
The Arctic is home to two potentially game-changing shipping routes: the Northwest Passage through the Canadian archipelago and the Northern Sea Route above Russia.
Each is thousands of kilometres shorter than current routes between Europe and Asia, and would be thousands of dollars cheaper to use – if they weren’t full of ice for much of the year. But as the Arctic continues to warm faster than climate science models predict, this is changing fast, especially in the more developed Northern Sea Route over Russia.
Last year 46 ships passed along this route, up from just four in 2010, according to data from the Centre for High North Logistics, a non-profit group backed by Norway’s government that promotes Arctic shipping.
Those 46 ships included polar research icebreaker the Snow Dragon, the first Chinese ship to make an Arctic crossing.
“It was striking how little ice there actually was during the voyage,” says Egill Thor Nielsson, an Icelandic researcher aboard the vessel.
Still, the Suez and Panama canals are unlikely to be worried just yet. They had more than 30,000 passages between them in 2012, said Paal Hilde of the Norwegian Institute of Defence Studies. “The Northern Sea Route has to grow massively to become any kind of competitor with these other routes,” he says.
But the prospect of more shipping in a region where an oil spill could cause extreme environmental damage is of mounting concern, and not just to green activists.
Cruise ship numbers in remote parts of the Arctic have grown over the past decade to the point at which, in peak season, there are as many as eight ships a week between Greenland and sparsely populated Spitsbergen Island, says Norway’s vice-admiral Haakon Bruun-Hanssen.
Some have upwards of 3,000 passengers, more than Spitsbergen’s population, he told an Arctic conference in Tromsø last month.
“Due to the size of these ships, any accidents in these areas will have a catastrophic magnitude,” he said.
These maritime developments are among the most visible signs of change in the Arctic, and a big reason why bodies such as the Arctic Council are now unusually popular. When it was founded in 1996, the council agreed to admit organisations with an interest in the region as observers. A few European nations joined, including Germany and the UK, as well as the World Wildlife Fund and some less obvious groups, such as the International Federation of Red Cross and Red Crescent Societies.
Over the years, the observer waiting list grew longer (there are now 14 applications outstanding) and more Asian. China applied in 2006, South Korea in 2008 (along with the EU), Japan in 2009, Singapore in 2011 and India in 2012.
Those who watch the council’s workings closely trace the delays to a mix of diplomatic wrangles. Canada, for example, has been in dispute with the EU over Brussels’ ban on seal products.
Much of the world’s growing fascination with the Arctic centres on climate change and how it is opening up this vast icy wilderness.
But figuring out the rate at which the Arctic is likely to thaw has proved to be extremely difficult.
All of these, however, are an aside. The real measure of the council’s importance has more to do with what its eight permanent member states are doing, not least its most powerful, the US.
The last time the council had one of its two-yearly ministerial meetings, in 2011, Washington did two things it had never done before: it sent Hillary Clinton, its secretary of state, to the meeting rather than a more junior diplomat, and agreed to the setting up of a permanent secretariat.
The same meeting signed off on another first: a binding treaty requiring the eight council members to co-ordinate the search-and-rescue efforts likely to be needed as a thawing Arctic makes shipping easier.
May’s ministerial meeting is expected to finalise a second treaty, this time on oil spill prevention, as well as the observer waiting list.
For all that, the Arctic issue that provokes the most long-term anxiety is the region’s oil and gas potential.
The last public estimate of what lies beneath the region’s seabed comes from a 2008 US Geological Survey study that showed the Arctic could have as much as 30 per cent of the world’s undiscovered natural gas and 13 per cent of its undiscovered oil.
As the Arctic melts, it is naturally assumed that companies will be more eager to extract this bounty. But so far, experts say the price of oil has been much more influential.
The Arctic is undergoing its second period of offshore exploration, says Andrew Latham of the Wood Mackenzie energy consultancy. During the first, in the 1970s and 1980s, as many as 20 new wells a year were drilled. That number dipped during the 1990s in line with global oil prices, but it is now rising. Wood Mackenzie thinks the number of new wells drilled will only reach about 10 per year in the near term, despite the changing climate. “Fundamentally, the oil price is what you are talking about,” says Dr Latham, adding that the amount companies are spending in this expensive and inhospitable region is relatively small in proportion to their investments in other countries.
Individually, however, the costs are large. Royal Dutch Shell has just spent $5bn struggling to drill wells off Alaska, and the UK’s Cairn Energy has spent more than $1bn on fruitless drilling off Greenland.
And these costs look even higher considering the USGS study appeared towards the beginning of a revolution in US shale gas and oil production. Since then, predictions of future global energy supplies have been overturned. Last year US gas prices were down to their lowest level in a decade.
“That means very, very expensive gas sitting offshore in the Arctic is now even more difficult to bring to market than it was before,” says the USGS’s Dr Donald L. Gautier, principal investigator for the 2008 assessment.
Still, the potential worth of these resources in a world whose energy-hungry population is forecast to grow from 7bn to as much as 9bn by 2050 is clear. Clearer, some say, than the rules governing who will be able to extract them.
First in line are the five states with an extensive Arctic coastline: Russia, the US, Canada, Norway and Denmark.
Under the 1982 UN Convention on the Law of the Sea, each country has rights to an Exclusive Economic Zone stretching 200 nautical miles offshore that lets it extract fish or fossil fuels from in or under the sea.
Beyond that 200 nautical mile limit, things become more tricky.
Countries that have ratified the Law of the Sea convention can make a submission for more extensive seabed rights if they can prove their continental shelves extend that far.
So far, Russia and Norway are alone among the five Arctic coastal states to have made such a submission and Norway’s relatively modest claim has been approved.
Russia, which made a much bigger grab for an area extending up to the North Pole, was told to come back with better data.
It was an expedition to gather this evidence that led to the planting of a Russian flag on the North Pole seabed in 2007, a move that set off much of the anxiety about potential Arctic conflict.
The US has not ratified the Law of the Sea convention, despite the best efforts of much of its foreign policy elite, who say this could undermine its ability to assert its rights in future.
Canada and Denmark are due to make their submissions shortly. Once they do, the world will see if their claims overlap with those of Russia.
“This is where talk of the potential conflict in the Arctic comes about,” says Martin Pratt, an international maritime boundaries expert at the UK’s Durham university.
Prof Pratt says such talk is overblown, arguing that experience of settling Arctic boundary disputes suggest that even if there are overlapping claims, they will be peacefully resolved.
In addition, all five Arctic coastal states agreed in 2008 they would settle any territorial disputes under accepted principles of international law as they extended their claims to more Arctic territory.
And all except Russia are Nato allies, so are considered unlikely to start firing on each other.
Meanwhile, even with record Arctic thawing, oil and gas operations in the region remain difficult and expensive.
“In 50 years, if the ice cap is gone, it might change somewhat,” says Prof Pratt. “But it’s still going to be cold, it’s still going to be stormy and it’s still going to be dark. It isn’t the first place in the world you would look to exploit oil if you were given the choice.”
Copyright The Financial Times Limited 2015. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.
Sign up for email briefings to stay up to date on topics you are interested in